Dividends4Life: Straight Talk On The 4% Rule

Straight Talk On The 4% Rule

Posted by D4L | Wednesday, May 27, 2015 | | 1 comments »

Seemingly everybody that has thought about retirement knows about the 4% rule. But some of what I have read recently has seemed misinformed or oddly slanted. The purpose of this article is to lay out the basics of what we have come to know as the 4% rule, give my own take, and perhaps to start a discussion about what it is, where it stands, and how to use it.

I believe that the 4% rule, 21 years after Bengen first articulated it, remains a remarkably useful benchmark. Bengen's work, as illustrated by Israelsen's update, has held up extremely well. I have a bias in this discussion, which is that I think that retirees are well advised to try to have portfolios that generate as much of their income organically as possible, consistent with their comfort levels. That is why I write so much about dividend growth investing, because an ultimate goal with that strategy is to have all of your income generated organically, including the annual increases to cover inflation.

Source: Seeking Alpha

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1 comments

  1. Dividend Beginner // May 27, 2015 at 7:03 PM

    Hi Dividends4Life,

    I totally agree with you bud. Rather have a portfolio which generates all that cash flow you'd otherwise have to work for while keeping your capital intact and untouched... Recipe for success and wealth!

    Best regards,
    DB

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